Profits from Peace: The Political Economy of Power-Sharing and Corruption

Felix Haass,Martin Ottmann

doi:10.1016/j.worlddev.2017.07.006

Abstract

Summary Does power-sharing drive corruption in post-conflict countries? We conceptualize government elites in any post-conflict situation as rent-seeking agents who need to ensure the support of their key constituencies to remain in power. Power-sharing institutions—especially cabinet-level, executive power-sharing institutions—systematically shape these rent-seeking motives. Power-sharing cabinets create political coalitions dominated by small circles of government and rebel elites with direct access to state resources and low levels of loyalty toward the government leader. Also, the provisional nature of many power-sharing institutions increases rent-seeking incentives: facing a limited time horizon in office, rent-seeking elites within the power-sharing coalition are likely to capture as many rents as possible before they have to leave office. Thus, post-conflict countries with power-sharing institutions should exhibit higher aggregated levels of rent-seeking measured as the level of corruption in a country. In a statistical analysis of all post-conflict situations during 1996–2010, we find that power-sharing cabinets substantively increase corruption in post-conflict countries and that this effect is stronger in the presence of natural resource rents. These findings add quantitative evidence to the debate about drivers of post-conflict corruption. Moreover, they highlight a trade-off between short-term stability and long-term negative effects of corruption for post-conflict political and economic development.

Highlights

Systemic corruption is an endemic problem in countries emerging from violent conflict (Cheng & Zaum, 2013; Lindberg & Orjuela, 2014)
In a statistical analysis of all post-conflict situations during 1996–2010, we find that power-sharing cabinets substantively increase corruption in post-conflict countries and that this effect is stronger in the presence of natural resource rents
In terms of substantive effects, the existence of executive power-sharing in a post-conflict country reduces the Control of Corruption scale by 0.17, on a scale that ranges from À1.8 to 0.6 with a standard deviation of 0.41. 12

Summary

INTRODUCTION

Systemic corruption is an endemic problem in countries emerging from violent conflict (Cheng & Zaum, 2013; Lindberg & Orjuela, 2014). We suspect that power-sharing institutions are more likely to increase corruption when there are higher levels of resources that are easy to capture, such as natural resources or foreign aid We test these predictions with a statistical time-series crosssectional analysis of post-conflict situations during 1996–2010. We focus on an important subset of countries in the developing world, post-conflict countries, and show that even shortlived transitional power-sharing governments in these countries can have a substantial effect on corruption levels. These academic contributions enable us to inject new empirical evidence into a critical policy debate. Policy-makers should focus on how to design successful power-sharing deals and on how a country can transition away from power-sharing once the risk of civil war recurrence has substantially subsided

CORRUPTION IN POST-CONFLICT COUNTRIES

THE POLITICAL ECONOMY OF POWER-SHARING

EMPIRICAL STRATEGY

RESULTS

DISCUSSION